Navigating the Net-Zero Industry Act: A Closer Look at European Cleantech Manufacturing Initiative

In the wake of the United States' Inflation Reduction Act (IRA) in August 2022, the European Commission responded with its strategic move – the Net-Zero Industry Act (NZIA). Unveiled in March 2023, the NZIA aims to position Europe at the forefront of clean technology manufacturing.

The IRA, legislation allocating over $369 billion to domestic clean energy production, marked a historic investment in the U.S. clean energy transition. Notably, the IRA's focus on energy storage projects is anticipated to significantly cut carbon emissions in the U.S. by 2030. In response to the global race for cleantech leadership, the NZIA seeks to streamline permitting procedures, support strategic projects, incentivize public procurement of cleantech, foster innovation, and ensure a skilled workforce. With an estimated investment need of EUR 92 billion from 2023 to 2030, the NZIA introduces Net-Zero Strategic Technologies, a list encompassing critical elements such as batteries and energy storage.

Setting ambitious targets, the NZIA aims for at least 40% of strategic clean technologies to be domestically manufactured by 2030. Addressing bureaucratic hurdles, the NZIA requires Member States to establish single points of contact for permitting. Besides, provisions on sustainability and resilience in public procurement procedures aim to diversify the EU's supply of clean technology. At the same time, the introduction of European Net-Zero Industry Academies has the potential to address labour shortages in the energy storage industry; while encouraging regulatory sandboxes for start-ups and SMEs can be crucial for emerging storage technologies.

So, is it all positive? Well, not exactly. While the NZIA streamlines procedures and facilitates access to existing instruments, its lack of ambition in addressing lengthy application processes and absence of additional financing have drawn criticism. Besides, details surrounding the functioning of many of the mechanisms listed above lack specificity.

In conclusion, the NZIA is a significant step forward for Europe in the cleantech race, but careful attention must be paid to the specifics of implementation to ensure its success in driving clean technology manufacturing and deployment. The European Association for Storage of Energy (EASE) remains vigilant in monitoring and advocating for the interests of its members in this dynamic landscape.